Mike Veseth is a professor of international political economy at the University of Puget Sound in Tacoma Washington. He has written, co-authored or edited many books on economic matters including Globaloney and Globaloney 2.0, books which deal with globalization and how economic policy must adapt if we are to solve the complex problems our policy makers face today.
Mike also happens to be a wine lover who hosts one of the most interesting wine blogs extant: The Wine Economist. He describes his blog as “what you get when you cross the Wine Spectator, America’s best-selling wine magazine, with the Economist, the world’s leading business weekly.” I think Mike’s metaphor mis-speaks: his blog is much more readable and appealing than the dense, hectoring editorial tone of the Economist magazine. I commend this blog as one of the most thought-provoking wine blogs I follow.
Mike has applied his economist’s perspective, his understanding of global affairs, his clear understanding of the business of wine and his crystal clear writing style to assemble one of the best wine books of 2011, according to Paul O’Doherty, book reviewer on JancisRobinson.com.
The book is Wine Wars, published in 2011 by Rowman & Littlefield.
This book is a great read for a general interest wine lover but is a book that could also be used as a reference book for a university-level wine marketing course, be it a wine MBA program at UC Davis or an undergraduate seminar at the Cool-Climate Oenological and Viticulture Institute at Brock University. Veseth writes clearly and weaves his analysis carefully so that non-technical readers will understand his thesis and have no difficulty embracing his conclusions. At the same time the book ponders questions for makers, importers, marketers and retailers that are excellent fodder for debate and analysis by students who will need to address the market scenario he paints for the future.
There are two themes that run through the book: the notion of the wine wall and, the work done in 2008 by four senior people at London wine merchant Berry Brothers and Rudd (BBR) in The Future of Wine Report.
The wine wall is the wall of shelves the consumer faces in their local wine store – be it a boutique, a supermarket, a Costco store (in the USA), a monopoly store, Trader Joe’s, an Aldi store in Germany, etc.
The wine wall of today is the best and most diverse demonstration of globalization of products and brands found anywhere in the world of consumer products. The wine wall can be bewildering to most consumers and Veseth walks us through how retailers adapt their version of the wall for their markets and their strategies – all in the interest of selling the most wine possible.
One of the best sections of the book is the analysis of how Tesco (UK), Aldi (Germany and elsewhere in the world) and Costco in the USA have built different wine walls and how each maximizes its share in its chosen market segments. Veseth selects the UK, Germany and the USA with specific intent: these are the top-three wine importing nations today and the firms he selected are the leading wine retailers in their markets.
The second theme was the trigger for this book. In The Future of Wine Report, Jasper Morris MW, Simon Field MW, David Berry Green and Alun Griffiths celebrated the 310th birthday of BBR by looking forward to the world of wine in 2058.
These gentlemen project climate change will do wonders for Canada as a leading wine producer by 2058. Wine fraud will be brought under control by microchips embedded in wine bottle closures. Some wines will be made from genetically-modified grapes grown hydroponically on offshore floating island vineyards. Australia will become too hot to produce quality wines in volume and production of boutique wines will be limited to a small handful of currently marginal climate zones such as Tasmania. China will become the world-leading producer of wine (measured by volume). Iconic wines such as the Classified Growths of Bordeaux will be bid up to stratospheric price levels by demand which will wildly out-strip supply (consider the BBR estimate of ₤10 million for a case made by an exceptional producer in an exceptional year…!). Climate change will see the sparkling wines of England reach quality levels where they challenge the best wines of Champagne; etc.
One forecasted item was the BBR expectation that branded wines will become so dominant that consumers will be able to order wine as they might order spirits today. Instead of ordering a Sapphire martini, the consumer of 2058 will order a carefully manufactured Lindemans Light or a Rosemount Red – made from grapes assembled from different countries, with flavourings added to make the specific-tailored styles preferred by consumers.
This aspect of the evolution of wine and wine markets became a catalyst for Veseth’s analysis that articulates how consumers, retailers, critics, makers – large and small – will shape the wine market of the future…and by my estimate it won’t take until 2058 to shape that future. This book deals with wine labels, wine geography, craft makers, huge wine conglomerates (think Constellation and Gallo), the importance of brand in de-risking wine purchases for fearful/timid consumers, market segmentation and on and on.
The book is replete with facts that astound. For instance, the number 1 wine brand in the world is Franzia. This is an American brand of The Wine Group, the third-largest wine company in the world. Franzia is a brand noted for its wide range of bag-in-box wines such as Chillable Red and Refreshing White. The boxes come in 3 – and 5 litre sizes and are sold at three different price points, depending on whether they are “refreshing and fruity”, reflect “old world heritage” or are “true to the varietal flavor without the overpowering flavor of oak” (quotes are taken directly from the Franzia web site).
Franzia, by the way is not connected with Fred Franzia, the owner of Bronco Wine Company. Fred is the nephew of Ernest Gallo, co-founder of the Gallo Brothers business and Bronco is maker of Charles Shaw wines, best-known as Two-Buck Chuck, wines that sell at Trader Joe’s stores in California for $1.99 per bottle. Fred is perhaps best known for his quote, “We choose to sell good quality wines at $2 a bottle because we think it’s a fair price. We think the other people are charging too much.”
All these players get recognition from Veseth in ways that demonstrate aptly how the world of wine is evolving to make wine more predictable for consumers who want to avoid lemons when they make their purchases – the McWine effect, Veseth calls this.
The world outlook is not as bad as it might sound. Just as every consumer product market is segmented to cater to different appetites, attitudes and budgets, so too the wine market will continue to evolve and the wine wall will adapt to cater to different consumer segments. Many consumers will suffer “arrested development” and never venture beyond the Two-Buck Chuck section of the wall. Other consumers will seek only the wines on the top-shelf of the wall – the icons that most of us don’t buy, due to budget or philosophical barriers. In between the top and the bottle shelves of the wall will be where most of my readers will continue to seek wines that reflect their sense of place and Veseth sees a rosy future in this middle ground. Read his book to understand his rationale…
The Veseth analysis is thorough, sound and matter-of-fact. This is a well and tightly-woven story, well-told by a creative thinker who appears also to be a good and caring teacher. A fascinating read, this book has pace, humour and insight.